Foreign Direct Investment (FDI): is long term investment method of personal or foreign company invest to other country by set up manufacturing facilities, business whose will have business controlling power
Stephen H. Hymes (1960), John H. Dunning (1981), Rugman A. A. (1987) and some other people said that the multinational corporations have a lot of characteristic advantages such as competences of firm, they allow multinational corporations can pass expense disincentive in foreign country, therefore they ready invest direct into foreign country. When the multinational corporations chose place of investment, they will chose good place where have conditions to help them bring into play characteristic advantages such as labour, position.
Foreign Direct Investment is a method to avoid conflict bipartite commerce. Example Japan has been complained by USA and Euro because Japan have commerce surplus, about USA and Euro have been traded gap in bipartite relationship. To cope, Japan was strengthened to direct investment into those markets. They have produced and sold cars and computers at USA and Euro, to reduce those export goods from Japan. They also invest directly in third countries, and from those they export to North America and Euro market
FDI not only go from more developed countries to less developed countries. Reverse even more strongly. Japan is a direct investment positive countries in American to exploit professional in American. Example: automobile companies in Japan have opened the car parts designed in the U.S. to use American experts. Lenovo is a multinational corporation in China, they bought parts manufacturer laptop of IBM in USA, that is a strategy of Lenovo approach preeminent computer production technologies of IBM
To have a lot of raw materials, many multinational companies invested into countries with abundant resources. The first biggest wave of direct investment was in Japan on the 1950 is for this purpose. China's FDI now has the same purpose.
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